Late in 1997, Michael Gerber, author of "The E-Myth," laid down a challenge to a group of remodelers attending a networking conference. He told these remodelers that in order to separate themselves from others in their markets, they had to offer something nobody else offered. One of them, Legacy Custom Builders'' Rosie Romero, took up that challenge. In January, Legacy introduced The Impossible Promise: "We''ll do the job right, on schedule, or it is free." If Legacy breaks The Impossible Promise, the entire project is free.
Legacy Custom Builders Inc.
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To succeed with the promise, Romero knows that his trade contractors must believe in it. So he''s built the framework for a partnership that not only rewards trades, but also holds them accountable for performing to Legacy standards. Because of these partnerships, as well as the other systems in place for the launch of The Impossible Promise, NAHB Research Center awarded Legacy a 2000 National Remodeling Quality Gold Award.
PR: You''ve created a roster of trade contractors called the A Team. How do they make that list?ROMERO: We have benchmarks. To be [on the A Team] and stay there, these are the things we want: Websites, e-mail addresses, uniforms, sign our code of ethics. They are terms of employment. We want these things in place [within six months].PR: Do these benchmarks include seniority?ROMERO: No, that actually doesn''t include seniority. We''re being pretty subjective right now, as to how much seniority is or isn''t going to impact [selection]. I told them we were being more objective than we ever have been before. It''s gotten many people where they are in our relationship, and it''s kept them there. But it may not keep them there in the future.
Legacy’s Promises
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We don''t give deposit checks anymore. That''s a cash management regulation. A lot of guys were asking for 50 percent down on a lot of their stuff. We''re saying, "You bring your material invoice to us on the stuff you need to pre-purchase, and we''ll pay you that, your overhead and your profit on it." We tightened up our deposit schedule a little bit, but they know they still can use us as a bank. We''ll still cover out-of-pocket costs. We''ve eliminated a portion of their marketing and sales budget. In turn, I want to be buying for 10 or 15 percent less than they''re selling their retail work and 5 to 10 percent less than they''re selling to other contractors.
PR: How important are the referrals to your trade contractors?ROMERO: For some subs, it is [very important]. Our roofer gets 100 referrals a year. He has told me that he''ll close 80 or 90 of those. They''re understanding is, "The work Legacy gets, I''m going to get. Legacy''s consistently bringing me 60 percent of my business [including the referrals]; I don''t have to go out and create a separate clientele. With Legacy''s growth pattern, all I have to do is keep Legacy happy. We can trust them; they''re not going to kick us out of bed. And as long as I hold up my part of the commitment, I''m going to get paid." They, [in turn] are going to treat those referrals just like a Legacy client.PR: How does project scheduling work?ROMERO: [Trades] will get a complete copy of the schedule. They know what day we''re starting the job, what day the concrete guy''s going to be there, what day the framers are going to be there, and what day they need to be there.They''ll be given a detailed scope of work so they''ll know the project. We''ve even gotten to the point where we''re using a digital camera. They''re getting a file of photos emailed to them, along with the package that''s faxed to them. It lets them see the scope, see the job, see the schedule, see the price and put together their cash flow forecast, based on the invoicing schedule. We''re trying to make it easy for them.
PR: How are you going to grade performance after June 1?ROMERO: Right now, our lead men fill out job reviews. That final payment cannot go out unless the lead man has completed a questionnaire on the sub''s performance. He gets a copy of it, then we put a copy in the vendor file. [The trade contractor] is also mailed a questionnaire on how we did. Were they given adequate notice? Were they given the details before? We''re going through this together. They''re grading us; we''re grading them.And when we give a referral out, my daughter calls all the leads at six months to find out: Did they use our referrals? Were they satisfied? Were they neat, clean? We''re checking every referral we give out.
Trades'' Commitments
See Also:
Cash Carries the Load